Understanding Crowd Funding

In raising capital for business, working alone can be strenuous. But there is so much you can do as a group. By combining your efforts as a group, either family or friends, you can coordinate to make the load light and ease the budget for everyone in the group. Gone are the days when one had to work their way forward single-handedly, when the approach towards raising the capital and tailoring the whole plan could hit a dead end and leave you counting loses.

Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors. This approach taps into the collective efforts of a large pool of individuals—primarily online via social media and crowdfunding platforms—and leverages their networks for greater reach and exposure.

Crowdfunding is essentially the opposite of the mainstream approach to business finance. Traditionally, if you want to raise capital to start a business or launch a new product, you would need to pack up your business plan, market research, and prototypes, and then shop your idea around to a limited pool or wealthy individuals or institutions. These funding sources included banks, angel investors, and venture capital firms, really limiting your options to a few key players. You can think of this fundraising approach as a funnel, with you and your pitch at the wide end and your audience of investors at the closed end. Fail to point that funnel at the right investor or firm at the right time, and that’s your time and money lost.

Sourced from: https://www.fundable.com/learn/resources/guides/crowdfunding-guide/what-is-crowdfunding

You are trying to sell an idea and convince people to make contributions towards the same. People are no longer gullible and you must therefore ensure that you are selling facts.

Crowdfunding is rarely easy. There are those campaigns that make it easy, but there are typically more mechanical turks running the show behind the scene than most realize. Before jumping in, it would behoove you to consider the following:

Is your idea that good? Really? Are you sure? Sometimes you might have a really good idea, but everyone thinks it’s crap. Sometimes, you might have a crap idea that turns out to be really good. I suggest you try getting a second or third opinion on it, from people you really trust (who will tell you straight) to see if they think it is a great idea, because at the end of the day, it’s the public who really matter when it comes to monetizing your idea.

What value will your product add to the consumer? You need to be able to explain to your audience how your product will change their lives or the lives of the people in your community. Backers like to be associated with “feel-good” initiatives, and this are, more often than not, ideas which have the potential to make people’s lives better, to improve general well-being of mankind. If your product or project won’t change anyone’s life, then, you won’t get any change for it (pun intended).


How well do you know your target market? Who is most likely to buy into your idea? Who is most likely to benefit from your product? If you can assertively answer this, then you will know who exactly to advertise to and how to do it.

Sourced from: http://crowdfund.co/factors-to-consider-before-crowdfunding/